Viewpoint: Cuts to spending on disadvantage foreshadow a looming crisis

This week Lloyds Bank Foundation launched new research from the New Policy Institute looking at changes to local government spending supporting people facing disadvantage. For LGiU, Caroline Howe, Policy and National Programmes Manager, Lloyds Bank Foundation explains what they’ve found.

Our new research titled ‘A Quiet Crisis’ shows that local authority spend on disadvantage – that is, services around things like homelessness, mental health, learning disabilities, asylum seekers and looked-after children – have seen a reduction of 2% since 2011/12. Taken at face value, perhaps 2% doesn’t sound too bad given the tight finances we’ve become used to but dig a little deeper and things get more concerning.

For starters, there is great variation of between spend on different types of services. The cumulative figure masks falls of 14% in spending on youth justice and a massive 59% reduction on substance misuse, for example.

Set this against rising demand and concerns grow further. A wealth of evidence, not least from the small and local charities we fund, points towards demand that just keeps rising – both in numbers and complexity, which means people need more support, for longer. With less money. Charities tell us the result is rising thresholds for support, and a growing crisis bias. The figures from local government highlight the extent of this shift, none more so than the example of homelessness.

Preventive support that helps people stay in their homes has been cut by a sobering 46%. At the same time, crisis support has risen by 58%. Most of the cost of crisis services are temporary accommodation. People are losing their homes where support has been cut, only to need more crisis support to access accommodation. This shift from preventive to crisis might make sense to address short term cash flow challenges. But it suggests long term public costs will go up, even if they fall under a different budget. It’s not just financial costs either, but emotional and psychological costs of people being forced into crisis.

If we turn to look at geography, the cuts aren’t spread equally across England. They are almost exclusively in the most deprived local authorities. 97% of the reductions in spend on disadvantage have been in the fifth most deprived councils. These are also the areas where demand for services is likely to be higher.

The biggest cuts in the poorest areas reflects the shifts that local authorities have seen to their own funding. The reduction in revenue support grant from central government is supposed to encourage local areas to generate their own income through local taxation. This approach fails to recognise that it is much harder to generate revenue in poorer areas, so these areas risk falling even further behind.

The current approach to supporting people facing disadvantage is not sustainable. With no end in sight to the rising demand and tight finances, we need to seriously look at raising the revenue base for local authorities. Efficiencies have already been made. All that’s left is further reductions in services. With those who need help most left further behind. The warning signs have been wailing. This new research shows the stark reality and forces us to ask if we’re really willing to fail those who need our help most.

Caroline Howe is Policy and National Programmes Manager at the Lloyds Bank Foundation.